Ford To Close 14 Plants, Cut 25,000-30,000 Jobs

By Mira Oberman, Agence France-Presse | Jan 23, 2006

Ford Motor Co. said Jan. 23 it will eliminate 25,000-30,000 jobs and close 14 plants in North America in a bid to staunch huge losses in its auto operations. The facilities, including seven vehicle assembly plants, will cease production by 2012. Ford said it hoped its hard-hitting plan would restore profitability in North America by 2008. Ford said it hopes to save $6 billion by 2010.

Ford named five assembly factories that will be shut by 2008 -- St. Louis (Missouri), Atlanta (Georgia), Wixom (Michigan), Batavia (Ohio), and Windsor (Canada). The other two sites will be named later this year.

Unions have called it "Black Monday" for the workers. Company chairman and chief executive Bill Ford said: "We will be making painful sacrifices to protect Ford's heritage and secure our future."

He said that in addition to the job cuts, salary-related costs were being cut 10% in North America with the previously announced reduction of 4,000 white-collar positions. The company said managerial ranks were being reduced by 12% by April.

The move comes just four years after Ford cut 35,000 jobs worldwide in a revitalization plan that included the elimination of several struggling brands and the capacity to build one million vehicles.

"The automotive market in North America is rapidly becoming as crowded and fragmented as other global markets," Ford said in the statement. "Going forward, we will be able to deliver more innovative products, better returns for our shareholders and stability in the communities where we operate."

The announcement came after Ford reported much better than expected fourth quarter earnings, but a slump in full-year profit. For all of 2005, Ford's net earnings slumped 43% to $2 billion, the automaker said, down from $3.5 billion in 2004. Much of its fourth quarter profit profit came from the sale of car rental agency Hertz and Ford's financial services unit, Ford Credit.

Meanwhile, Ford's struggling North American automotive unit posted a $1.6 billion annual loss, down three billion dollars from 2004.

Analysts said investors are more worried about whether Ford will get its auto operations back to profitability. "The near-term savings are not going to be as much as it needs to be," Brian Ropp, an auto analyst with T. Rowe Price brokerage told AFP. But Dave Cole, president of the Center for Automotive Research, said: "It's a good move, because Ford can't be a full-line manufacturer. They have to focus on investing their money where they'll make money. "If they get one million units out of production, they can go forward to regain profitability," said Cole.

Cutting production levels also will not help Ford's declining market share. In the past 10 years, Ford has seen its share of the U.S. market drop from 26.4% to 17.4%, the lowest level since the 1920s. Ford boosted overall sales in the 1990s with sports utility vehicles, but its market share in that segment waned as Japanese rivals introduced smaller, car-based, crossover SUVs. The real trouble hit in 2005, when US gasoline prices topped $3 a gallon and Ford's light truck sales -- which includes SUVs -- fell 8.7%.